But oil prices cut their losses after the weekly Baker Hughes rig count showed a drop of 15 oil rigs operating in the US, suggesting production will continue to fall slowly.

The rally in stocks "is a little bit of a reaction to oil coming back," said Art Hogan, chief market strategist at Wunderlich Securities.

Yahoo added 0.2 per cent as activist fund Starboard Value announced it would nominate a slate of nine directors as part of a push to overhaul the struggling Internet pioneer.

Office Depot jumped 9.0 per cent and Staples 7.0 per cent after a US judge rebuked the Federal Trade Commission in connection with the agency's lawsuit to block their merger on antitrust grounds.

US District Judge Emmet Sullivan said the FTC tried to persuade a witness to give false testimony in the case, Bloomberg News reported. The government has argued the merger will adversely affect competition in the office supplies market.

Apparel maker PVH, which owns the Calvin Klein and Tommy Hilfiger brands, jumped 7.6 per cent after reporting that fourth-quarter earnings were US$134.2 million, up from US$51.5 million in the year-ago period.